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Later stage ideas always get more money, this is rational and should stay that way. Later stage companies are bigger and more complex, and having de-risked the
by moxious 9y ago
Later stage ideas always get more money, this is rational and should stay that way. Later stage companies are bigger and more complex, and having de-risked the basics, are more apt to build huge things like new factories. They'll have hundreds or thousands of employees, and the need to acquire much larger scale in order to continue growing.
By contrast, small companies can do really well with much less capital, because they're trying to do smaller things (hire 12 people, not 1,200) and they need to do more basic things to de-risk their ideas.
Consider: $100 million could more than adequately seed 100 early stage companies, but it wouldn't be enough to build a single factory in some places.
- Retric 9y agoYou also get far less dilution if you take 1 million > grow > 9 million > grow > 90 million. Vs just taking 100 million when your company is wort ~.5 to 5 million.
- pm90 9y agoThis is a good point, but I wonder if the parent wasn't talking specifically of making $100 million available to one startup, but $1 million per startup. One could fund a lot more ideas that way, and odds are that one of them would be a unicorn. The only reason why that's not really happening seems to me that we either don't have that many ideas or that much people willing to work on those ideas.
- whatok 9y agoI think a bigger reason is that the administrative burden of dealing with 100 startups is incredibly difficult and also would likely eat into returns.